Why are cruise lines constantly cutting back?

We all know that Carnival and other cruise lines have been cutting back on staffing along with various services and offerings that have been found on-board in the past. I won't list them all, but the term "Death by a thousand cuts" has been used frequently on this board.

My question is why.........

The economy is good for the most part and improving.

And cruise line profitability is also fairly robust.

There's more ships than ever sailing, so it seems that competition would promote improvement in the cruise product, but instead it seems to be constantly diminishing in an effort to squeeze out every possible nickel.

There obviously was a time when this trend was the opposite, Companies looked for ways to offer a better experience or there won't be so much to could take away or cut back on these days.

What changed?

Simply because passengers are willing to accept less or accept lower quality and pay more. Until the cruise lines quit filling ships at prices and offerings of their choosing this is what will continue to happen. The mighty dollar matters most to them.

Profit ,shareholder expectations and wall street analysts

Profit ,shareholder expectations and wall street analysts

Amen to that! Think of all the companies doing the same thing now under the same circumstances that were mentioned (growing economy, good market, tax cuts etc) by OP. Companies are doing very well with profits but they are closing stores, laying off people and expecting the same customer service with the employees left. They are not replacing people for the most part but doubling the workload in some cases, happens quite often actually as they make sure the stockholders get theirs. This is business life now and no reason that every business isn't going to jump on that train....

Profit ,shareholder expectations and wall street analysts

 

Amen to that! Think of all the companies doing the same thing now under the same circumstances that were mentioned (growing economy, good market, tax cuts etc) by OP. Companies are doing very well with profits but they are closing stores, laying off people and expecting the same customer service with the employees left. They are not replacing people for the most part but doubling the workload in some cases, happens quite often actually as they make sure the stockholders get theirs. This is business life now and no reason that every business isn't going to jump on that train....

Great points, but there's been publicly traded companies for over 100 years and this type of business practice wasn't so prevalent until perhaps the last 20 years or so. What caused this change to focus absolutely on shareholder profit instead of customer experience?

They're greedy.

Great points, but there's been publicly traded companies for over 100 years and this type of business practice wasn't so prevalent until perhaps the last 20 years or so. What caused this change to focus absolutely on shareholder profit instead of customer experience?

The industry has gotten huge. Prior to the early 90's the market was small...ships were small. Used to be cruising was for the wealthy and mostly Transatlatic crossings. Cruising used to be a niche type thing...Now its a full vacation option. Marketing and Supply/Demand have changed things. Offerings on ships have changed things....Its now a resort on water in some cases.(especially the Oasis RCL ships) Have some of the lines gotten too big?? Probably. Carnival has 25 ships now...fleetwide. More ships ...means lower prices usually. Unfortunately....ships cost money....more insurance/liability/more staff, fuel, supplies, etc...all adds up. Investors see a booming market...Investors also want return on their investment

People insist on living in the past and want something for nothing. Why does it matter what you used to get from cruise lines back in 1998 when today is 2018. The world is constantly evolving so move with it or fall by the sideway.

Simply because passengers are willing to accept less or accept lower quality and pay more.

More than that passengers reward the first tier cruise lines that charge the lowest base fares. The unbundling of the cruise fare is a reflection of the typical American Consumer purchasing behaviors.

This post may have been entered by voice recognition. Please excuse any typographical errors.

I think lcpagejr is onto something with the comparison of what cruising used to be like to what it is today. I'm a new cruiser - our first cruise was in 2013. We were absolutely thrilled with every aspect of our cruise. We came on board knowing we would be "nickelled and dimed" to death, and we were okay with that. The food, entertainment, service and condition of the ship seemed superb to us because we had nothing else to compare it to. We're today's cruisers: middle-class, not big spenders, not looking for luxury.

For those who have been cruising since the days of "The Love Boat," they were cruising when cruising was for the elite (much like air travel before the 80s). You dressed up for it, and you expected to be treated like royalty. There's nothing wrong with that, but the cruise industry begin catering to "my" crowd in the late 90s, and now the quality you were once used to has been lowered because the majority of the sailing crowd is okay with that. Compared to our daily life, cruising on NCL IS luxurious! And yes, as long we the sailing public tolerate what is offered and continue to pay for it, that's what we're going to get.

Hopefully the higher-quality cruise lines still meet the expectations of those who prefer a more elite experience. There should be something for everyone.

Great points, but there's been publicly traded companies for over 100 years and this type of business practice wasn't so prevalent until perhaps the last 20 years or so. What caused this change to focus absolutely on shareholder profit instead of customer experience?

Well, there's a couple of things. First is why there is the emphasis on shareholder profit. This is partly legal (boards have been removed or sued for not meeting their fiduciary commitment to the shareholders, but that is a whole nother topic: legal system), and partly the way that business schools teach the "objective by quarter" approach. We need to maximize profits this quarter, so that the board and shareholders are happy, and we will worry about what we do this quarter affecting next quarter, next quarter.

Now, again, I have no quantitative data on "cut backs in staff", only anecdotal reports from passenger "impressions" and crew reports who may not be impartial (looking for the tip), and I can't say whether the reductions in front of house that folks feel, is balanced by an increase in back of house, or whether it is a true crew reduction. So, without any data, I won't speculate.

Earnings per share, and in my opinion, return on investment, is about mid-range for most of the cruise lines, compared to business averages, it is by no means exorbitant. Ship owning is a horribly capital intensive business, and that capital is tied up for a long time (couple of years) before the company sees a return on it when the ship starts sailing. This is one large factor in driving return on investment down.

Now, since the lines are only making average profits, as costs go up, regardless of the business climate, and you have a fixed capacity (until you can build a new ship in a couple of years), you either need to increase price, or cut costs. Their business model is to keep prices as low as possible, so some costs have to go by the wayside.

What folks need to do is to see not only what cruise prices were "in the good old days" and convert that to modern dollars to see what prices would look like today, but also look at the earnings per share, and return on investment comparisons between the "good old days" and now. I don't have any data on this, but given the increased cost of ship operation, and ship construction, I would bet that profits, earnings, and ROI were higher then than now.

Because they can.

Losing a few customers but still increasing profits will allow it to continue. They have lots more cuts they can make before people stay away in meaningful numbers. Don't think they don't pay attention to those surveys when they ask if a cruise was a "good value" compared to other vacations. Even with cuts and more cuts, most people obviously think it's still a good value.

I think lcpagejr is onto something with the comparison of what cruising used to be like to what it is today. I'm a new cruiser - our first cruise was in 2013. We were absolutely thrilled with every aspect of our cruise. We came on board knowing we would be "nickelled and dimed" to death, and we were okay with that. The food, entertainment, service and condition of the ship seemed superb to us because we had nothing else to compare it to. We're today's cruisers: middle-class, not big spenders, not looking for luxury.

 

 

 

For those who have been cruising since the days of "The Love Boat," they were cruising when cruising was for the elite (much like air travel before the 80s). You dressed up for it, and you expected to be treated like royalty. There's nothing wrong with that, but the cruise industry begin catering to "my" crowd in the late 90s, and now the quality you were once used to has been lowered because the majority of the sailing crowd is okay with that. Compared to our daily life, cruising on NCL IS luxurious! And yes, as long we the sailing public tolerate what is offered and continue to pay for it, that's what we're going to get.

 

 

 

Hopefully the higher-quality cruise lines still meet the expectations of those who prefer a more elite experience. There should be something for everyone.

My first cruise was in 2015 and I completely agree with everything here. Except I cruise Princess.

The individual lines may all be owned by Carnival Corporation (exception RCCL and a few others) but they all have an individual market they target. You still get luxury on ships depending on what line you choose.

Sent from my iPhone using Forums

I just wish one of the big lines would bring back butler service. we have always been willing to pay for it, but it has gone away. so sad.

I just wish one of the big lines would bring back butler service. we have always been willing to pay for it, but it has gone away. so sad.

What would you expect from butler service? You have a dedicated steward on Princess.

Sent from my iPhone using Forums

It personally doesn't bother me. I paid nearly $2000 for a summer cruise out of Long Beach, in an inside cabin, on the Elation in 2001. The same itinerary for an interior cabin (and even same location) this summer, is listed at practically the same price. Though admittedly I miss some of the perks, I'm ok with the cutbacks that keep me able to afford cruising. (Oh and according to measuringworth.com, that same $2K holds a value in 2018 between $2600 and $3K, so I am actually paying less for a cruise then in 2001.)

I just wish one of the big lines would bring back butler service. we have always been willing to pay for it, but it has gone away. so sad.

Get a Suite on Celebrity.

We're today's cruisers: middle-class, not big spenders, not looking for luxury.

This. So much this. I feel so pampered on a cruise ship. Other people are cooking my meals. I don't have to clean my bathroom. I don't have to go far to get a drink.

I don't mind going to the bar and waiting a bit for my coffee. I don't expect the waiter to check in on me - in fact I find it a bit irritating.

I don't expect or need the waiter to remember me. I don't need a personal relationship with her.

I hope for no obnoxiuos kids and not too many drunken cruise guests. But that's not the responsibility of the cruise company.

There could be a few reasons.

Perhaps some things that seem like cutbacks actually have practical reasons (they claim the chocolates melted in the wash).

Some things could be improvements to some but not to others (when they started giving free bottled water).

It could be than in a booming economy inflation becomes a thing but they want to be able to advertise cheap cruises even as costs increase.

Could be shareholder greed.

Here's my thoughts on some of the cutbacks

[YOUTUBE]avgxvydQnzY[/YOUTUBE]

Yes...it's because folks keep paying the price for less and less. If folks stopped cruising, then the quality would rise again.

A Carnival Cruise I believe is still a good value, I have 4 spa balcony booked on the Breeze for 7 nights then a 8 night Disney World trip, the Disney trip with the dining package is over $9000.00 more than the cruise and that is in a value hotel.

Sent from my iPhone using Forums

Greed, pure and simple.

I know the cutbacks have caused me to not book another cruise for a while. I don't mind paying more if the value is there, but I don't like paying the same price and getting less. I'm booked at my first AI and with flights included, it's cheaper than just the cabin on my Horizon cruise.

Water finds its level. Cruise lines will try to maximize profit, minimize expense, and continue to get people to pay for their services. Because they keep on building more and bigger ships and are comfortably profitable, it seems they have found a working formula for the time being. If they go too far, something better will come along. Many of the cut backs are just getting rid of the vestiges from an earlier model for cruising. A middle class family taking a cruise for a vacation is still a relatively new idea.

Hi

Sorry but it is not a question of greed. It is the same for any company.

As a company their only "requirement" is to maximize profits. In fact it is necessary for them to make "more" money. Of course that would be compared the previous year. So they are always trying to make more money. They are not allowed to say " we did really well last year, we don't have to try as hard this year."

If the company doesn't make as much money this year as the previous, the company owners/investors/shareholders will lose money because their investment isn't earning as much as it had in the past. That is in simple terms why shareholders will sell shares of a company that isn't performing well. Why would anybody invest in a company that isn't performing well (making "more" money), compared to one that is. Needless to say the people in charge of making decisions regarding profitability are held to account if the company doesn't perform well. They could soon be out of a lucrative position if their performance is called into question. These CEO's would much rather be accused of doing too good a job than failing.

So, being a shareholder of this company, I hope they continue to make "more" money. They can either do that by cutting costs, or raising prices. It's pretty easy, they do one or the other or both.

hope this helps